Many media companies and financial institutions have been coming up with reports which indicate that property prices have reached the levels touched in 2007, and will increase further.
But the real picture seems to be different.
A few developers were hiking prices in Mumbai over the past three months, but inventories have been piling up. Ergo, developers who are sitting on these inventories are either lowering or freezing their prices.
The Nahar Group is a case in point—it has reduced prices in its project ‘Nahar’s Amrit Shakti’, situated at Powai in central Mumbai. A two-bedroom hall & kitchen (BHK) of 1,150 sq ft is retailing at Rs7,800 per sq ft—the price was Rs8,500 per sq ft one-and-a-half months back.
K Raheja Corp is launching two new towers at ‘Raheja Vistas’ (also at Powai), at Rs7,900 per square feet. The developer has no plans to increase prices.
Developers who are planning to come up with new projects are also not increasing prices, but are trying to keep them at reasonable levels. According to Ressex data (released by real-estate advisory firm Liases Foras), the number of units sold in Mumbai went down by 25% in December 2009 compared to September 2009.
Currently, inventories in the Mumbai Metropolitan Region (MMR) stand at 82 million sq ft and Ressex data indicates that demand for high-value properties continues to be depressed.
Developers who have to offload 500 units to 1,000 units over the next two years are also keeping a lid on prices.
For many media companies, headlines that point to property prices rising even further, usually translates into increased advertising revenue. In some cases, they have equity deals with realty companies which include an agreement to project reports that favour these companies. A reader has written to point out that some of these headlines sound like “quotes from the builder.” — Pallabika Ganguly